If you’re considering becoming an insurance agent, you’re setting yourself up for a potentially lucrative and stable career. Not only is the demand for insurance agents high, but even the average insurance agent usually earns enough to support themselves. How much an insurance agent can earn depends on a number of different factors, but making the right decisions for your specific situation could lead to earning well into the six figures.
Find out how much insurance agents make in 2020 and what steps you can take to increase your profits.
how much do insurance agents earn in 2020?
according to the us Bureau of Labor Statistics, an insurance agent earns an average of $50,600 per year as of 2018. The salary for the position can vary dramatically, with the lowest 10% earning less than $27,500 and the highest 10% earning more than $125,610.
How an insurance agent earns their annual salary differs depending on the company they work for and the type of insurance they sell. they can earn based on a salary-only model, a salary-and-commission model, or a salary-plus-bonus model. The commission factor is part of the reason an insurance agent’s earnings can vary so dramatically. Most independent insurance agents make their living on commission alone.
what factors determine the salary of an insurance agent?
The average salary for an insurance agent is not what everyone in this occupation earns. insurance agents can earn anywhere from less than the nation’s median salary to as high as six figures. here are a variety of different factors that can determine your salary.
Your potential salary differs depending on whether you are a captive agent or an independent agent. Captive agents are tied exclusively to the products of an insurance company.
captive agents have the advantage of the insurance company generating leads for them, as well as a formal office environment working with other agents. however, a captive agent is limited to selling only one insurance company’s policies, potentially making it difficult to achieve a sale.
Captive agents often earn from commissions, but may also receive a salary from their insurance company. many also rely on a seasonal bonus to bolster their annual income.
independent agents are self-employed. While they don’t benefit from having one insurance company do the marketing for them, they have endless opportunity to grow their business and the ability to sell a variety of policies from multiple insurance companies.
Less experienced insurance agents can benefit greatly from being a captive agent, while someone with more experience in the field can benefit more from being an independent agent. Selecting what type of insurance agent you want to be depends on your specific situation and career goals.
type of insurance
The type of insurance you sell helps determine how much you earn. Each type of insurance provides its own unique opportunities to attract new customers and upsell current customers to increase profits.
When selling auto and home insurance, an insurance agent can expect to earn a percentage of the policy premium, as well as a percentage of your policy renewal. This means that having an ever-expanding network of clients could increase your profits exponentially.
Life and health insurance policies work with a slightly different salary structure. When a customer first signs up for a policy, the agent gets a large percentage of the sale. the agent also earns revenue from the renewal of the policy, albeit at a much cheaper rate. After the third year, many agents stop earning a policy renewal commission altogether.
Location is another big variable in your salary. Cost of living, crime rates, public health status, accident rates, and other local statistics can have a big influence on insurance rates. Ultimately, these local factors affect the amount of the premiums and, therefore, the insurance agent’s commission.
See also: FDIC: Deposit Insurance
An area with a large population may offer more opportunities to find new customers, but it may also provide a higher concentration of agents, making for a more competitive market. It’s important to consider your desired salary and lifestyle before deciding where you want to work as an insurance agent.
The percentage and volume of commissions you receive can influence your earnings as an insurance agent.
If you’re an independent agent, you can usually earn a much higher percentage of your commission.
If you are a captive agent, you will receive a smaller percentage of the policy price. The average insurance company gives captive agents a 5-10% commission on any policy sold, while the average independent agent earns around 15% commission.
To become an insurance agent, education matters less than formal training. While a bachelor’s degree can be helpful, the position only requires a high school diploma.
When it comes to training, insurance agents must learn from other agents. Many agents starting their careers will shadow other agents to better understand the position and its requirements. Continuing education is also important, as the laws and regulations that influence how insurance policies are structured and sold are constantly changing.
Insurance agents must be licensed by the state in which they practice. Agents may also need to obtain different licenses to sell different types of insurance. Agents become licensed by taking and passing state exams on insurance law and ethics.
compared to many other occupations in the us. In the US, insurance agents have good pay and employment prospects. The position is expected to grow 10% by 2028. The demand for positions is expected to remain constant because insurance companies will always need a way to find and obtain new clients. This is especially true for independent insurance agents, whom insurance companies are starting to adopt more frequently to cut costs. position is also impervious to automation for now. in fact, technology has helped insurance agents work more efficiently. New technologies, such as marketplace automation software, have made it easier for insurance agents to gain new customers, maintain relationships with them over time, and ultimately sell more insurance and policy renewals.